Can I Use My FSA or HSA to Buy Over-the-Counter Products?

The average American household spends about $645 each year on OTC products, according to a 2022 report by the Consumer Healthcare Products Association. OTC medications can help reduce more expensive trips to the doctor, and are an alternative to pricier prescription medication by expanding access to at-home treatments for the common cold, allergies, gastrointestinal issues, skin issues, and more. Knowing which OTC products qualify to spend your FSA and HSA dollars on can help you save money on these recurring annual healthcare expenses.

Here is an explanation of which OTC items generally qualify, how to pay for OTC products with your FSA or HSA cards, and when you might need extra documentation, such as a Letter of Medical Necessity (LMN).

What Counts as an Over-the-Counter Product for FSA/HSA Purposes?

• OTC, or over-the-counter products are medicines and supplies you can buy without a prescription—this can include items such as pain relievers, cold and allergy medication, first-aid items, and more.
• Many common OTC medications are generally covered by HSAs and FSAs, including products that are not medicines such as Band-Aids, sunscreen, menstrual care products, or contact lens solution.
• However, items that are just beneficial to overall health and not to treat or prevent an illness may not be eligible for reimbursement, according to the IRS.
• Some OTC medications might be automatically eligible, while others may require specific circumstances or with documentation, such as an LMN.

When Are Over-the-Counter Medications Covered by FSA or HSA?

• The IRS defines qualified medical expenses as costs primarily to alleviate or prevent a physical or mental disability or illness.
• For OTC medications, this means products used to prevent or treat a medical condition—such as pain relievers, cold and allergy medicines, digestive aids, sunscreen—are generally FSA and HSA eligible.
• Some products fall into more of a grey area. Topical products such as body lotion, bath soaks, or even general vitamins may not be HSA or FSA eligible, unless they are being used to treat or manage a specific medical condition with documentation.
• That’s why it’s important to check your plan’s eligible expense list, which ultimately determines which OTC products are FSA or HSA available under your plan, and which ones may require additional documentation.

Common OTC Categories and Whether They Qualify

Guidance only. Eligibility varies by product and plan. Some items may require an LMN for qualified customers. Check your plan details before purchase.

How to Check What OTC Is FSA Eligible Under Your Plan

• Check which OTC products are FSA-eligible by looking up your insurance plan’s eligible expenses list. Your plan’s website should have links or PDFs outlining which OTC products you can spend your FSA funds on.
• You can also check the FSA online store’s website to see which OTC you are eligible for—however, be sure to check this against your plan because eligibility rules may vary.
• It’s a good idea to check your plan’s eligibility list to see what you qualify for before shopping for OTC products with your FSA funds. If you’re unsure whether a specific item is eligible, contact your plan’s customer service line instead of guessing.
• It’s worth re-checking which OTC products are eligible at the start of a new plan year, because these rules can change.

Using Your HSA for Over-the-Counter Medicine

• Unlike FSAs, which are generally use-it-or-lose-it, HSA funds typically carry over each year, and you must be enrolled in a high-deductible health plan to have one. While you may want to let your HSA funds grow and use it for bigger medical expenses, you can often use your HSA to buy OTC medication too.
• If you’re trying to grow your HSA savings, consider paying out-of-pocket for smaller OTC costs, or use your HSA funds when medication costs feel more significant.
• Similar to an FSA, check your plan’s website to see which OTC medicines are HSA-eligible. Typically, common OTC medications and menstrual care products are eligible to buy with your HSA funds. However, some OTC products might only be covered by your HSA when used to treat or manage a specific medical condition that may require additional documentation.

How to Pay for OTC Purchases with FSA or HSA (Step-by-Step)

Start by reviewing which OTC products are typically eligible on your plan’s website before shopping.

If you have an FSA or HSA debit card with your plan, use it at checkout (online or in-store) for items that are clearly eligible. Note: While many payment systems may approve items tagged as eligible, your plan ultimately decides which items qualify for reimbursement.

Save all itemized receipts, even if some items are automatically approved.

If your FSA/HSA card is declined or only partially covers the order, pay for the rest out-of-pocket and submit a claim with the receipt to see if the rest of the order is eligible.

Be sure to keep an eye on FSA “use-it-or-lose-it” deadlines and the balance in your HSA, so you’re keeping track of your funds and know how much to spend.

Edge Cases: OTC Items That Often Confuse People

• Some OTC products can be confusing and may feel health-related but are not HSA/FSA-eligible.
• While plan rules may vary, OTC products that are just beneficial to overall health may not qualify.
• This includes OTC products that are used for both cosmetic and medical reasons. Some skincare items like acne treatments may qualify, while others may not. Check your plan rules before buying.
• If you’re buying OTC products that come in bundles with items that are both eligible and non-eligible, it may be unclear how much of it can actually be reimbursed.
• Subscription boxes that include a mix of OTC products might also be confusing—some individual items within the box may be eligible, and others may not. Your plan may also treat these items differently than single, clearly labeled items.

Example OTC Purchases and How to Use FSA vs HSA

Guidance only. Eligibility varies by product and plan. Some items may require an LMN for qualified customers. Check your plan details before purchase.

Compliance & Documentation (Staying on the Safe Side)

• It’s a good idea to keep itemized receipts and plan statements of all your purchases together, whether you’re buying OTC products online or in-store. You may need them later to confirm OTC purchases.
• While there are ways to use your FSA and HSA funds together, make sure you are not reimbursing the same OTC expense from both your HSA and FSA.
• Again, if you’re unsure whether an OTC product is covered, make sure you check your plan’s rules before you buy.
• Remember that while the IRS has set broad rules for medical expenses, your plan may have stricter rules on which OTC items are FSA/HSA eligible.

How It Works with HSA/FSA and Truemed

In addition to everyday OTC products, there could be other products and services you may be able to spend your HSA or FSA funds on if you have a qualifying medical condition. Here’s how Truemed* can help.

• Truemed can help connect qualified customers to an independent licensed practitioner who reviews the information submitted through a clinical intake form. If appropriate, the practitioner may issue a Letter of Medical Necessity (LMN) for specific products or services that you may be able to spend your HSA or FSA funds on.
• This can include medical or fitness equipment, smart watches, saunas, cold plunges, or a mattress, for qualifying customers when used to treat or manage a specific health condition with an LMN.

*Truemed is for qualified customers. HSA/FSA tax savings vary. Learn more at truemed.com/disclosures.